To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Continue Reading Troutman Pepper Weekly Consumer Financial Services Newsletter
More than two years after the Supreme Court’s opinion in Facebook v. Duguid, courts and litigants continue to wrestle with the statutory definition of “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act (TCPA). The debate centers on footnote 7 in Facebook, wherein the Supreme Court ostensibly embraced the proposition that an ATDS includes dialing systems that employ random or sequential number generators (RSNGs) to index and/or order telephone numbers for later dialing, but do not themselves generate the telephone numbers to be dialed. A recent opinion issued in the U.S. District Court for the District of Colorado illustrates the ongoing controversy surrounding footnote 7 and its impact on current and future TCPA claims.
Continue Reading Colorado Federal Court Declines to Dismiss TCPA Claim: Finds ATDS Plausibly Alleged Based on Reasoning in Facebook’s Footnote 7
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Continue Reading Troutman Pepper Weekly Consumer Financial Services Newsletter
On July 13, U.S. Senators Cynthia Lummis (R-WY), Kirsten Gillibrand (D-NY), Elizabeth Warren (D-MA), and Roger Marshall (R-KS) introduced an amendment to the National Defense Authorization Act (NDAA) that seeks to examine the adequacy of current anti-money laundering obligations (set forth in the Bank Secrecy Act (BSA)) as applied to crypto assets, crypto asset kiosks, payment stablecoin issuers, and crypto asset mixers.
Anti-Money Laundering Examination Standards
The amendment would task the Secretary of the Treasury, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) with establishing a “dedicated risk-focused examination and review process” for entities they regulate, such as broker-dealers, swap dealers, and money services businesses.
Within two years of the amendment’s enactment, each agency would be required to assess: (1) the adequacy of reporting obligations and anti-money laundering (AML) programs under subsection (g) and (h) of § 5318 of the BSA as applied to entities they regulate; and (2) compliance of those entities with anti-money laundering and countering the financing of terrorism (CFT) requirements under subchapter II of chapter 53 of the BSA.
Crypto Asset Kiosks
The amendment also introduces new measures targeting crypto asset kiosks, defined as a “stand-alone machine, including a crypto asset automated teller machine, which facilitates the buying, selling, or exchange of crypto assets.”
The amendment would afford the Financial Crimes Enforcement Network (FinCEN) two years from enactment to institute certain measures mandating that crypto asset kiosk owners and administrators: (a) submit and regularly update the physical addresses of their kiosks every 120 days; (b) collect specific details from each counterparty to a transaction, including name, physical address, phone number, and date of birth; and (c) verify each customer’s identity using a valid form of government-issued identification or other approved methods.
Additionally, within 180 days after the enactment of the amendment, FinCEN would be required to issue a public report identifying unlicensed kiosk operators and administrators.
Sanctions Compliance for Payment Stablecoin Issuers
The amendment would require the Secretary of the Treasury to establish, within 120 days from the enactment of the amendment, clear guidance on the sanctions compliance responsibilities of payment stablecoin issuers. These responsibilities concern downstream transactions related to the stablecoin that occur after it has been provided to a customer.
Crypto Asset Mixers and Tumblers
Crypto asset mixers and tumblers are open-source software services that pool potentially identifiable cryptocurrency funds with the funds of others to obscure the trail that might otherwise lead to the original source of the funds.
The amendment would require the Director of FinCEN to submit a report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services within one year of enactment.
The Director of FinCEN’s report must analyze: (a) the current typologies of crypto asset mixers and tumblers and their historical transaction volume; (b) estimated percentage of transactions relating to mixers and tumblers which are used by actors engaged in illicit finance; (c) potential non-illicit uses of mixers and tumblers; (4) regulatory approaches being employed by other jurisdictions with respect to mixers and tumblers; and (5) recommendations for legislation of mixers and tumblers.
Our Take:
The amendment proposes a significant ramping up of regulatory measures within the crypto asset landscape, aiming to tighten AML/CFT measures, improve customer data collection and identity verification of users of crypto ATMs, and resolve whether crypto mixers and tumblers can be used for non-illicit purposes as industry stakeholders have advocated. If it becomes law, this amendment could usher in a new era of federal governance and oversight in the rapidly evolving world of digital assets and distributed ledger technologies.
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Continue Reading Troutman Pepper Weekly Consumer Financial Services Newsletter
More than two years after the Supreme Court released its ruling in Facebook v. Duguid, confirming the meaning of automatic telephone dialing systems (ATDS) under the Telephone Consumer Protection Act (TCPA), a plaintiff has filed a petition for a writ of certiorari to the Supreme Court to challenge the Ninth Circuit’s application of the Facebook decision. The Facebook ruling effectively closed the door on one of the broadest classes of TCPA-related litigation; since then, plaintiff-side advocates have worked ceaselessly, though largely unsuccessfully, to chip away at the ruling. If the Supreme Court accepts the appeal, this will represent a significant development in the ongoing saga of ATDS litigation.
Continue Reading First Post-<em>Facebook</em> Appeal Makes Its Way to Supreme Court
As shown by a new report, the Consumer Financial Protection Bureau (CFPB or Bureau) is focusing its fair lending work on mortgage origination and pricing, small business lending, redlining, and the use of artificial intelligence (AI) and machine learning models.
On June 29, the CFPB released its annual Fair Lending Report (Report) to Congress describing its fair lending enforcement and supervisory activities, guidance, and rulemaking for calendar year 2022. The Report satisfies the CFPB’s statutory responsibility to report annually to Congress on public enforcement actions taken pursuant to the Equal Credit Opportunity Act (ECOA).
Continue Reading CFPB’s 2022 Fair Lending Report Focuses on Bias in Mortgage Lending, Redlining, Home Appraisals, Small Business Lending, and Shows Continued Skepticism of AI
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Continue Reading Troutman Pepper Weekly Consumer Financial Services Newsletter
To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:
Continue Reading Troutman Pepper Weekly Consumer Financial Services Newsletter
The Consumer Financial Protection Bureau (CFPB or Bureau) has signaled that it intends to propose a rule that would allow it to exercise supervisory authority over a greater number of nonbank financial companies that participate in the consumer payments market.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), the CFPB has authority to examine “larger participants” in various consumer financial products and services markets that the Bureau designates by rule — past examples include consumer reporting, debt collection, student loan servicing, international remittances, and auto finance. The CFPB’s proposed rule would “further the scope” of the CFPB’s supervision over the consumer payments market to include nonbank larger participants.
The agenda states that a notice of proposed rulemaking is expected in July 2023.
This proposal represents the culmination of the CFPB’s attempts to regulate the payments industry that started around the time that Rohit Chopra took over as the Director of the CFPB. In October 2021, the CFPB issued orders to collect information on the business practices of large technology companies operating payments systems in the United States. At the time, the CFPB said that it needed the information to “better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection.” More recently, Director Chopra and members of Congress discussed possible amendments to Regulation E to remove barriers that prevent consumers from recovering money from banks and payments companies when bad actors fraudulently induce consumers into sending money to the bad actors through peer-to-peer apps. Although payments companies are already required to comply with state and federal laws, CFPB supervisory examinations will be a new experience if the CFPB follows through with the proposed rule.
We also note that this forthcoming larger participant rules comes at a time where the CFPB seems to be using its supervisory authority in a more expansive way than in the past. Numerous nonbanks have received information requests from the CFPB recently, inquiring about whether they are larger participants in markets already subject to CFPB jurisdiction, which suggests that the Bureau intends to begin performing examinations of more companies in those markets. Further, the Bureau has notified a number of nonbanks that they are being considered for supervision under the “risks to consumers” provision in Dodd-Frank, which the Bureau announced that it planned to use more extensively in 2022. Supervision has become an even more active venue for the Bureau to advance its policy objectives, and now it appears that the CFPB intends to bring this authority to bear on the payments industry.